If something is too good to be true it usually is

A little-known UP based, Indian company has brought forth purportedly the world’s cheapest smart phone. At $ 4 (Rupees 251), it is less than the price of one kilogram of red-meat in my city. Bookings were supposed to open at 6 a.m. this morning, but when I tried to log in around 6:15 a.m.; I was greeted with a word-processor-like white screen with nothing on it. Twitter feeds reported that the site had crashed and that April fool’s prank had come a little bit early this year. But at the time of this writing, around noon, they have managed to keep it up and running where I can log in and place the buy order. Now, with an additional Rs 40 as shipping charges. At a price of Rs 291 (Rs 251 + 40 shipping) it may seem like a dream offer. But I am not buying.

 

The 3G handset, Freedom 251, features a 4-inch display, Qualcomm 1.3-GHz quad-core processor and 1 GB RAM. There were initial reports that the low-cost of the device was due to the apps that were preloaded into the device and that it was heavily subsidized by the Indian Government. But the company has denied the rumors by stating that no subsidy is being given by the Government.

 

A few years ago, another little known company, Datawind, had released what was the much-hyped Akash Tablet. At that time, it was marketed as the world’s cheapest tablet. Every international publication, including Time magazine had lauded this company’s efforts. But as it had turned out to be, it was more marketing hype than any real product. The few tablets that were actually distributed under the scheme turned out to be of substandard, low spec, hardware that were simply not usable (due to overheating).

 

Even earlier, cheap Chinese mp3 players with inbuilt memory were available in Indian markets. It had what the Chinese called “factory-formatted memory”, with a warning that the user should not format it lest they lose the full memory. It was a cheap firmware trick where the device would show a certain amount of memory, but when anyone formats it before loading it with mp3 songs; it would reveal the actual memory, usually 128 MB.

 

The Indian Cellular Association, ICA, which consists of the likes of Samsung, Sony, Microsoft, Micromax, and others, has filed a petition with the Indian Government stating that to produce a handset with the specifications Ringing Bells has announced, the cost of components procured from the cheapest supply chain plus the manufacturing and marketing costs would come closer to Rs 4100. Ringing Bells has claimed that the cost would be only Rs 2500 for which it has got an elaborate plan to bring it down. By assembling in India, they would get Rs 400 duty exemption; and by selling it directly to the customer, they would save another Rs 480. They also plan to open their online website to other companies thereby saving the rest. It is easier said than done.

 

The company claims that they will deliver all the ordered pieces by June 30. I suspect if they can deliver on that promise. This world works on certain definite rules, and this offer seems to defy everything. I am not going to send them my Rs 291, and then wait a few months for the delivery. For me, to do it, they will have to defy the very principles of economics. As the saying goes, “if it is too good to be true it usually is.” I bet. This is not going to happen.

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